Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 14, 2019 | Jun. 29, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Senseonics Holdings, Inc. | ||
Entity Central Index Key | 0001616543 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Public Float | $ 432 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 176,958,387 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 136,793 | $ 16,150 |
Marketable securities | 0 | 20,300 |
Accounts receivable, primarily from a related party | 7,097 | 3,382 |
Inventory, net | 10,231 | 2,991 |
Prepaid expenses and other current assets | 3,985 | 2,092 |
Total current assets | 158,106 | 44,915 |
Deposits and other assets | 117 | 176 |
Property and equipment, net | 1,750 | 853 |
Total assets | 159,973 | 45,944 |
Current liabilities: | ||
Accounts payable | 4,407 | 7,712 |
Accrued expenses and other current liabilities | 13,851 | 5,428 |
Deferred revenue | 628 | |
Notes payable, current portion | 10,000 | 10,000 |
Total current liabilities | 28,886 | 23,140 |
Notes payable, net of discount | 4,783 | 14,414 |
Convertible senior notes, net of discount | 36,103 | |
Derivative liability | 17,091 | |
Notes payable, accrued interest | 1,764 | 1,054 |
Other liabilities | 85 | 69 |
Total liabilities | 88,712 | 38,677 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value per share; 450,000,000 and 250,000,000 shares authorized as of December 31, 2018 and 2017; 176,918,381 and 136,882,735 shares issued and outstanding as of December 31, 2018 and 2017 | 177 | 137 |
Additional paid-in capital | 428,878 | 270,953 |
Accumulated deficit | (357,794) | (263,823) |
Total stockholders' equity | 71,261 | 7,267 |
Total liabilities and stockholders’ equity | $ 159,973 | $ 45,944 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Class of stock information | ||
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 250,000,000 |
Common stock, shares issued | 176,918,381 | 136,882,735 |
Common stock, shares outstanding | 176,918,381 | 136,882,735 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
Revenue, primarily from a related party | $ 18,913 | $ 6,373 | $ 332 |
Cost of sales | 27,059 | 9,758 | 660 |
Gross profit | (8,146) | (3,385) | (328) |
Expenses: | |||
Sales and marketing expenses | 27,730 | 6,857 | 2,736 |
Research and development expenses | 31,863 | 30,735 | 26,347 |
General and administrative expenses | 19,839 | 15,336 | 13,022 |
Operating loss | (87,578) | (56,313) | (42,433) |
Other income (expense), net: | |||
Interest income | 2,001 | 135 | 80 |
Interest expense | (8,282) | (3,099) | (1,602) |
Change in fair value of derivative liability | 209 | ||
Other (expense) income | (321) | 176 | 25 |
Total other expense, net | (6,393) | (2,788) | (1,497) |
Net loss | (93,971) | (59,101) | (43,930) |
Total comprehensive loss | $ (93,971) | $ (59,101) | $ (43,930) |
Basic and diluted net loss per common share (in dollar per share) | $ (0.60) | $ (0.51) | $ (0.49) |
Basic and diluted weighted-average shares outstanding (in shares) | 157,429,145 | 115,975,402 | 89,243,853 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2015 | $ 76 | $ 151,019 | $ (160,792) | $ (9,697) |
Balance (in shares) at Dec. 31, 2015 | 75,760 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares | $ 17 | 44,557 | 44,574 | |
Shares issued (in shares) | 17,239 | |||
Exercise of stock options and warrants | $ 1 | 1,324 | 1,325 | |
Exercise of stock options and warrants (in shares) | 570 | |||
Stock-based compensation expense and vesting of RSUs | 2,421 | 2,421 | ||
Issuance of warrants related to debt | 430 | 430 | ||
Net loss | (43,930) | (43,930) | ||
Balance at Dec. 31, 2016 | $ 94 | 199,751 | (204,722) | (4,877) |
Balance (In shares) at Dec. 31, 2016 | 93,569 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares | $ 42 | 66,819 | 66,861 | |
Shares issued (in shares) | 42,461 | |||
Exercise of stock options and warrants | $ 1 | 286 | 287 | |
Exercise of stock options and warrants (in shares) | 853 | |||
Stock-based compensation expense and vesting of RSUs | 3,993 | 3,993 | ||
Issuance of warrants related to debt | 104 | 104 | ||
Net loss | (59,101) | (59,101) | ||
Balance at Dec. 31, 2017 | $ 137 | 270,953 | (263,823) | 7,267 |
Balance (In shares) at Dec. 31, 2017 | 136,883 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares | $ 38 | 149,006 | 149,044 | |
Shares issued (in shares) | 38,077 | |||
Exercise of stock options and warrants | $ 2 | 2,257 | 2,259 | |
Exercise of stock options and warrants (in shares) | 1,873 | |||
Conversion of 2023 Notes | 250 | 250 | ||
Conversion of 2023 Notes (in shares) | 85 | |||
Stock-based compensation expense and vesting of RSUs | 6,412 | 6,412 | ||
Net loss | (93,971) | (93,971) | ||
Balance at Dec. 31, 2018 | $ 177 | $ 428,878 | $ (357,794) | $ 71,261 |
Balance (In shares) at Dec. 31, 2018 | 176,918 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net loss | $ (93,971) | $ (59,101) | $ (43,930) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation expense | 270 | 227 | 155 |
Non-cash interest expense (debt discount and deferred costs) | 3,317 | 453 | 252 |
Change in fair value of warrants | 430 | ||
Change in fair value of derivative liability | (209) | ||
Stock-based compensation expense | 6,412 | 3,993 | 2,421 |
Provision for lower of cost or net realizable value | 201 | 226 | |
Net realized gain on marketable securities | (115) | (128) | |
Changes in assets and liabilities: | |||
Accounts receivable | (3,715) | (3,131) | (250) |
Prepaid expenses and other current assets | (1,893) | (1,727) | 659 |
Inventory | (7,441) | (2,741) | (477) |
Deposits and other assets | 59 | (71) | 43 |
Accounts payable | (3,395) | 4,642 | 1,817 |
Accrued expenses and other current liabilities | 8,355 | 823 | 893 |
Deferred revenue | 628 | ||
Accrued interest | 710 | 781 | (54) |
Deferred rent | 16 | 15 | 25 |
Net cash used in operating activities | (90,771) | (55,739) | (38,016) |
Cash flows from investing activities | |||
Capital expenditures | (989) | (345) | (479) |
Purchases of marketable securities | (7,935) | (33,181) | (7,291) |
Sales and maturities of marketable securities | 28,350 | 20,300 | |
Net cash provided by (used in) investing activities | 19,426 | (13,226) | (7,770) |
Cash flows from financing activities | |||
Proceeds from the issuance of common stock | 149,502 | 67,556 | 46,184 |
Common stock issuance costs | (458) | (695) | (447) |
Proceeds from issuance of warrants | 104 | ||
Proceeds from exercise of stock options and stock warrants | 2,259 | 287 | 161 |
Proceeds from issuance of notes | 5,000 | 22,500 | |
Notes issuance costs | (104) | ||
Proceeds from convertible senior notes | 52,950 | ||
Convertible senior notes issuance costs | (2,245) | ||
Principal payments on notes payable | (10,000) | (12,500) | |
Financing costs of notes | (1,004) | ||
Principal payments under capital lease obligations | (20) | (80) | |
Net cash provided by financing activities | 191,988 | 72,068 | 54,894 |
Net increase in cash and cash equivalents | 120,643 | 3,103 | 9,108 |
Cash and cash equivalents, at beginning of period | 16,150 | 13,047 | 3,939 |
Cash and cash equivalents, at end of period | 136,793 | 16,150 | 13,047 |
Supplemental disclosure of cash flow information | |||
Cash paid during the period for interest | 3,136 | $ 1,830 | $ 893 |
Supplemental disclosure of non-cash investing and financing activities | |||
Capital expenditures not paid | $ 178 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2018 | |
Organization | |
Organization | 1. Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the design, development and commercialization of glucose monitoring systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. Senseonics, Incorporated is a wholly-owned subsidiary of Senseonics Holdings and was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. Senseonics Holdings and Senseonics are hereinafter collectively referred to as the “Company” unless otherwise indicated or the context otherwise requires. |
Liquidity
Liquidity | 12 Months Ended |
Dec. 31, 2018 | |
Liquidity | |
Liquidity | 2. The Company's operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, lack of operating history and uncertainty of future profitability. Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the Company’s research and development programs. The Company has not generated significant revenues from the sale of products and its ability to generate revenue and achieve profitability largely depends on the Company’s ability, alone or with others, to complete the development of its products or product candidates, and to obtain necessary regulatory approvals for the manufacture, marketing and sales of those products. These activities, including planned significant research and development and sales and marketing efforts, will require significant uses of working capital throughout 2019 and beyond. On March 23, 2016, the Company effected the initial closing of its public offering of 15,800,000 shares of its common stock at a price to the public of $2.85 per share (the “March 2016 Offering”). Additionally, the Company closed on the partial exercise of the underwriters’ option to purchase additional shares on April 5, 2016. The Company received aggregate net proceeds from the Offering of $44.8 million (after deducting underwriters’ discounts and commissions of $2.7 million and additional offering related costs of $1.4 million). On June 30, 2016, the Company entered into Amended and Restated Loan and Security Agreement with Oxford Finance LLC (“Oxford”) and Silicon Valley Bank (“SVB”) to potentially borrow up to an aggregate principal amount of $30.0 million. On June 30, 2016, the funding conditions for tranche 1 were satisfied and the Company borrowed $15.0 million. The Company used approximately $11.0 million from the proceeds from tranche 1 to repay the outstanding balance under the Company’s previously existing Loan and Security Agreement with Oxford, dated as of July 31, 2014, including the applicable final payment fee due thereunder of $1.0 million. On November 22, 2016, the funding conditions for tranche 2 were satisfied and the Company borrowed $5.0 million. On March 29, 2017, the funding conditions for tranche 3 were satisfied and the Company borrowed $5.0 million. On June 1, 2017, the Company effected the closing of its offering of 29,078,014 shares of its common stock at a price of $1.41 per share (the “May 2017 Offering”). The Company received aggregate net proceeds from the May 2017 Offering of $40.4 million. On August 23, 2017, the Company effected the closing of its offering of 13,383,125 shares of its common stock at a price of $2.15 per share (the “August 2017 Offering”). The Company received aggregate net proceeds from the August 2017 Offering of $26.5 million. In January 2018, the Company issued $50.0 million in aggregate principal amount of convertible senior subordinated notes, and in February 2018, the Company issued an additional $3.0 million in aggregate principal amount of convertible senior subordinated notes (collectively, the “2023 Notes”) upon the partial exercise of the underwriters’ over-allotment option. On June 28, 2018, pursuant to an underwriting agreement with BTIG, LLC, the Company closed an underwritten offering of 38,076,561 shares of common stock, including BTIG, LLC’s exercise in full of its option to purchase additional shares, at a price of $3.93 per share (the “June 2018 Offering”). The Company received aggregate net proceeds from the June 2018 Offering of $149.0 million. M anagement has concluded that, based on the Company’s current operating plans, its existing cash and cash equivalents will not be sufficient to meet the Company’s anticipated operating needs through the first quarter of 2020. Accordingly, the Company believes that doubt about the Company’s ability to continue as a going concern exists. Historically, the Company has financed its operating activities through the sale of equity and equity-linked securities and the issuance of debt. The Company plans to continue financing its operations with external capital. However, the Company may not be able to raise additional funds on acceptable terms, or at all. If the Company is unable to secure sufficient capital to fund its commercialization, research and development and other operating activities, the Company may be required to delay or suspend operations, enter into collaboration agreements with partners that could require the Company to share commercial rights to its products to a greater extent or at earlier stages in the product development process than is currently intended, merge or consolidate with other entities, or liquidate. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. A portion of the notes payable are classified as long-term in the accompanying consolidated balance sheet as of December 31, 2018 and 2017. The terms of the notes include a subjective acceleration clause which management deems as remote. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet the Company’s obligations as they become due. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements reflect the accounts of Senseonics Holdings and its wholly-owned subsidiary Senseonics. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, depreciable lives of property and equipment, and estimated accruals for preclinical study costs, which are accrued based on estimates of work performed under contracts. Actual results could differ from those estimates; however management does not believe that such differences would be material. Segment Information Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, glucose monitoring products. Comprehensive Loss Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the years ended December 31, 2018, 2017 and 2016, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company’s cash and cash equivalents potentially subject the Company to credit and liquidity risk. The Company maintains cash deposits at major financial institutions with high credit quality and, at times, the balances of those deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed the federally insured amounts. Concentration of Revenues and Customers At any given time, the Company’s trade receivables are concentrated among a small number of principal customers. If any of the Company’s customers fail to perform their obligations under the terms of these financial instruments, the Company’s maximum exposure to potential losses would be equal to amounts reported on its consolidated balance sheets. During the years ended December 2018 and 2017, the Company derived a majority of its total revenue from two customers. During the year ended December 2018, the Company derived 86 percent of its total revenue from one of those two customers. Total revenues from Roche Diabetes Care GmbH were $16.2 million. Revenues by geographic region The following table sets forth revenues derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the year ended December 31, 2018. All of the Company’s revenues were earned from sales outside of the United States for the years ended December 31, 2017 and 2016. Year Ended December 31, 2018 % (Dollars in thousands) Amount of Total Revenues: Outside of the United States $ 17,498 % United States 1,415 Total $ 18,913 % Marketable Securities Marketable securities consist of government and agency securities and corporate debt securities. The Company’s investments are classified as available for sale. Such securities are carried at fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company periodically reviews inventory to determine if a write down is necessary for inventory that has become obsolete, inventory that has a cost basis less than net realizable value, and inventory in excess of future demand taking into consideration the product shelf life. Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. Property and Equipment Property and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which is between three to five years for laboratory equipment, between five to seven years for office furniture and equipment, and the shorter of lease term or useful life for leasehold improvements. Upon disposition of the assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Repairs and maintenance costs are included as expense in the accompanying statement of operations. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management did not identify any indicators of impairment in 2018, 2017, and 2016. Derivative Financial Instruments In connection with the Company’s issuance of the 2023 Notes in January 2018, the Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in the Company’s consolidated balance sheets in accordance with Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging . The financial instrument is remeasured at the end of each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense) as change in fair value of 2023 derivative. Warranty Reserve The Company may replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs associated with a product are recorded at the time of shipment. The Company estimates future replacement costs by analyzing historical replacement experience for the timing and amount of returned product, and the Company evaluates the reserve quarterly and makes adjustments when appropriate. At December 31, 2018 and December 31, 2017, the warranty reserve was $0.8 million and $0.8 million, respectively. The following table provides a reconciliation of the change in estimated warranty liabilities for the years ended December 31, 2018 and 2017: December 31, (Dollars in thousands) 2018 2017 Balance at beginning of the year $ 813 $ 67 Provision for warranties during the period 1,119 813 Settlements made during the period (157) (20) Net changes in liability for pre-existing warranties, including expirations and changes in estimate (959) (47) Balance at end of the year $ 816 $ 813 Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers , using the full retrospective transition method. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company generates product revenue from sales of the Eversense system and related components and supplies at a fixed price to third-party distributors in the European Union and to a network of strategic fulfillment partners in the United States (collectively, “Customers”) who then resell the products to health care providers and patients. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenues from product sales are recognized when the Customers obtain control of the Company’s product, which occurs at a point in time, based upon the delivery terms as defined in the distributor agreement. The Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. The Company offers no discounts, rebates, rights of return, or other allowances to the Customers which would result in the establishment of reserves against product revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a Customer contract. Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales includes raw materials, contract manufacturing service fees, reserves for expected warranty costs, reserves for inventory valuation, scrap, and shipping and handling expenses associated with product delivery. Shipping and Handling Expenses Shipping and handling expenses associated with product delivery are included within cost of sales in the Company’s consolidated statements of operations. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses include costs related to employee compensation, preclinical and clinical trials, manufacturing, supplies, outsource testing, consulting and depreciation and other facilities-related expenses. Stock-Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. The Company uses the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of stock-option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, future volatility of the Company’s stock price, dividend yields, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can affect the fair value estimate. Under ASC 718, the cumulative amount of compensation cost recognized for instruments classified as equity that ordinarily would result in a future tax deduction under existing tax law shall be considered to be a deductible difference in applying ASC 740 , Income Taxes . The deductible temporary difference is based on the compensation cost recognized for financial reporting purposes; however, these provisions currently do not impact the Company, as all the deferred tax assets have a full valuation allowance. Since the Company had net operating loss (“NOL”) carryforwards as of December 31, 2018 and 2017, no excess tax benefits for the tax deductions related to share-based awards were recognized in the statements of operations. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company did not have any amounts accrued relating to interest and penalties as of December 31, 2018 and 2017. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 1998 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the net operating losses and research and development credit carryforwards that may be used in future years are still subject to adjustment. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. Based on the borrowing rates currently available for loans with similar terms, the Company believes that the fair value of its long-term notes payable approximates their carrying value. The fair values of the Company’s marketable investments are reported in Note 15 —Fair Value Measurements . Net Loss per Share Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potential common shares is anti-dilutive. The total number of anti-dilutive shares at December 31, 2018, 2017 and 2016, consisting of common stock options and stock purchase warrants, which have been excluded from the computation of diluted loss per share, was as follows: 2018 2017 2016 Stock-based awards 21,457,946 16,413,840 11,389,773 2023 Notes 20,480,638 — — Warrants 4,071,581 4,427,086 5,184,988 Total anti-dilutive shares outstanding 46,010,165 20,840,926 16,574,761 For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method. Recent Accounting Pronouncements Recently Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and creates a new ASC Topic 606, Revenue from Contracts with Customers . In 2015 and 2016, the FASB issued additional ASUs related to ASC Topic 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. The Company adopted this new standard on January 1, 2018 using the full retrospective transition method. The adoption of the new standard did not materially impact the amounts reported in the Company’s consolidated financial statements and there were no other significant changes impacting the timing or measurement of revenues or the Company’s business process and controls. In January 2016, the FASB issued ASU 2016-01, guidance on the classification and measurement of financial instruments. This ASU was further amended in February 2018 by ASU 2018-03. The guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The guidance also amends certain disclosure requirements associated with the fair value of financial instruments. The Company adopted this new standard on January 1, 2018. The adoption of this guidance did not have a significant impact on the Company’s financial statements. In August 2016, the FASB issued ASU 2016-15, guidance on the classification of certain cash receipts and cash payments in the statements of cash flows, including those related to debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, and distributions received from equity method investees. The Company adopted this new standard on January 1, 2018 on a retrospective basis. The adoption of the new standard did not impact the amounts reported in the Company’s consolidated statements of cash flows. Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. In July 2018, the FASB issued ASU 2018-11 to provide another transition method, allowing a cumulative effect adjustment to the opening balance of retained earnings during the period of adoption. The guidance is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company will adopt the guidance on January 1, 2019. The Company has substantially completed the process of reviewing its lease agreements and evaluating the impact of the lease guidance on its consolidated financial statements. The Company is still in the process of reviewing its contract manufacturing agreements for embedded leases. The Company does not anticipate recording right of use assets and lease liabilities greater than 5% of total assets and total liabilities, respectively, upon adoption of this guidance. In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share-based payments made to nonemployees so the accounting for such payments is substantially the same as those made to employees. Under the guidance, share based awards to nonemployees will be measured at fair value on the grant date of the awards, entities will need to assess the probability of satisfying performance conditions if any are present, and awards will continue to be classified according to ASC 718 upon vesting which eliminates the need to reassess classification upon vesting, consistent with awards granted to employees. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The Company will adopt the guidance on January 1, 2019. The Company has determined that the guidance will not have a significant impact on its consolidated financial statements. The Company has evaluated all other issued unadopted Accounting Standards Updates and believes the adoption of these standards will not have a material impact on its consolidated statements of operations, balance sheets, or cash flows. |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2018 | |
Marketable Securities | |
Marketable Securities | 4. The Company held no marketable securities as of December 31, 2018. Marketable securities available for sale as of December 31, 2017 were as follows (in thousands): December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Government and agency securities $ 5,990 $ — $ — $ 5,990 Corporate debt securities 14,310 — — 14,310 Total $ 20,300 $ — $ — $ 20,300 At December 31, 2017, all marketable securities available-for-sale had contractual maturities of less than one year and were classified as current assets on the consolidated balance sheets. |
Inventory, net
Inventory, net | 12 Months Ended |
Dec. 31, 2018 | |
Inventory, net | |
Inventory, net | 5. Inventory, net consisted of the following (in thousands): December 31, 2018 2017 Finished goods $ 1,457 $ 375 Work-in-process 7,211 2,150 Raw materials 1,563 466 Total $ 10,231 $ 2,991 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets | 6. Prepaid expenses and other current assets consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 2017 Contract manufacturing $ 2,962 $ 1,601 Marketing and sales 287 93 IT and software 244 214 Interest receivable 239 4 Clinical and preclinical 111 35 Other 142 145 Total prepaid expenses and other current assets $ 3,985 $ 2,092 |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment, net | |
Property and Equipment, net | 7. Property and equipment consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 2017 Laboratory equipment $ 2,132 $ 1,019 Office furniture and equipment 122 87 Leased equipment 159 159 Leasehold improvements 647 628 3,060 1,893 Less: Accumulated depreciation (1,310) (1,040) Property and equipment, net $ 1,750 $ 853 Depreciation expense, including amortization of property and equipment acquired under capital leases, for the years ended December 31, 2018, 2017, and 2016 was $0.3 million, $0.2 million, and $0.2 million, respectively, and is recorded within the operating expenses and cost of goods sold in the consolidated statements of operations. Gross assets recorded under capital leases were $0.2 million as of December 31, 2018 and 2017. Accumulated depreciation associated with capital leases was $0.1 million as of December 31, 2018 and 2017, respectively. The Company disposed of $0 of fully depreciated property and equipment in 2018, 2017, or 2016. |
Other Balance Sheet Details
Other Balance Sheet Details | 12 Months Ended |
Dec. 31, 2018 | |
Other Balance Sheet Details | |
Other Balance Sheet Details | 8. Accrued expenses and other current liabilities consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 2017 Contract manufacturing $ 6,068 $ 1,209 Compensation and benefits 3,685 2,209 Interest on notes payable and 2023 Notes 1,268 180 Product warranty 816 813 Sales and marketing services 738 25 Professional services 727 917 Clinical and preclinical 147 55 Other 402 20 Total accrued expenses and other current liabilities $ 13,851 $ 5,428 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. The Company leases approximately 33,000 square feet of research and office space under a non-cancelable operating lease expiring in 2023 . The Company has an option to renew the lease for one additional five-year term. Additionally, the Company leases approximately 12,000 square feet of office space under a cancelable operating lease expiring in April 2019. Rent expense is recognized on a straight-line basis and was $0.7 million, $0.6 million, and $0.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. The contractually required cash payments under these leases at December 31, 2018 are as follows (in thousands): 2019 $ 611 2020 629 2021 648 2022 668 2023 282 Total minimum lease payments $ 2,838 On March 31, 2016, the Company amended a corporate development agreement with a supplier to include a minimum purchase commitment per year. Total research and development expense related to the minimum payment was $1.1 million and $1.2 million during the years ended December 31, 2018 and 2017, respectively. There were no remaining future minimum payments under this commitment at December 31, 2018. |
401(k) Plan
401(k) Plan | 12 Months Ended |
Dec. 31, 2018 | |
401(k) Plan | |
401(k) Plan | 10. The Company has a defined contribution 401(k) plan available to all full-time employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal income tax regulations. Participants are fully vested in their contributions. There have been no employer contributions to this plan. Administrative expenses for the plan, which are paid by the Company, were not material in 2018, 2017 or 2016. |
Notes Payable and Stock Purchas
Notes Payable and Stock Purchase Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable and Stock Purchase Warrants | |
Notes Payable and Stock Purchase Warrants | 11. Term Notes Payable On June 30, 2016, the Company entered into an Amended and Restated Loan and Security Agreement with Oxford and SVB (the “Lenders”). Pursuant to the Amended and Restated Loan and Security Agreement, the Company has borrowed an aggregate principal amount of $25.0 million in the following three tranches: $15.0 million (“Tranche 1 Term Loan”); $5.0 million (“Tranche 2 Term Loan”); and $5.0 million (“Tranche 3 Term Loan”) (each, a “Term Loan,” and collectively, the “Term Loans”). The funding conditions for the Tranche 1 Term Loan were satisfied as of June 30, 2016. Therefore, the Company issued secured notes to the Lenders for aggregate gross proceeds of $15.0 million (the “Notes”) on June 30, 2016. The Company used approximately $11.0 million from the proceeds from the Notes to repay the outstanding balance under the Company’s previously existing Loan and Security Agreement with Oxford, dated as of July 31, 2014, including the applicable final payment fee due thereunder of $1 million. The Company borrowed the Tranche 2 Term Loan in November 2016 upon the Lenders’ confirmation that the Company received positive data in its U.S. pivotal trial of Eversense, and the Company filed a pre-market approval (“PMA”) application for Eversense in the United States with the FDA. The Company borrowed the Tranche 3 Term Loan in March 2017 upon the Lenders’ confirmation that the Company completed its first commercial sale of its second-generation transmitter in the European Union. The maturity date for all Term Loans is June 1, 2020 (the “Maturity Date”). The Term Loans bear interest at a floating annual rate of 6.31% plus the greater of (i) 90-day U.S. Dollar LIBOR reported in the Wall Street Journal or (ii) 0.64%, provided that the minimum floor interest rate is 6.95%, and require monthly payments. The monthly payments initially consisted of interest-only through December 31, 2017. In January 2018, the Company began to make monthly principal payments that will continue until the Maturity Date. The Company may elect to prepay all Term Loans prior to the Maturity Date subject to a prepayment fee equal to 3.00% if the prepayment occurs within one year of the funding date of any Term Loan, 2.00% if the prepayment occurs during the second year following the funding date of any Term Loan, and 1.00% if the prepayment occurs more than two years after the funding date of any Term Loan and prior to the Maturity Date. The Amended and Restated Loan and Security Agreement contains customary events of default, including bankruptcy, the failure to make payments when due, the occurrence of a material impairment on the Lenders’ security interest over the collateral, a material adverse change, the occurrence of a default under certain other agreements entered into by the Company, the rendering of certain types of judgments against the Company, the revocation of certain government approvals of the Company, violation of covenants, and incorrectness of representations and warranties in any material respect. Upon the occurrence of an event of default, subject to specified cure periods, all amounts owed by the Company would begin to bear interest at a rate that is 5.00% above the rate effective immediately before the event of default, and may be declared immediately due and payable by Lenders. Pursuant to the Amended and Restated Loan and Security Agreement, the Company also issued 10-year stock purchase warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock with exercise prices of $3.86, $2.38 and $1.86 per share, respectively, to the Lenders. The Notes are collateralized by all of the Company’s consolidated assets. The Notes also contain certain restrictive covenants that limit the Company’s ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into various specified transactions, as well as financial reporting requirements. The Company incurred issuance costs related to the Notes of approximately $0.6 million that are being amortized as additional interest expense over the term of the Notes using the effective interest method. The fair value of the stock purchase warrants, which was estimated to be $0.5 million, was recorded as a discount to the Notes, which is also being amortized as additional interest expense over the term of the Notes using the effective interest method. At maturity (or earlier prepayment), the Company is also required to make a final payment equal to 9.00% of the aggregate principal balances of the funded Term Loans. This fee is being accrued as additional interest expense over the term of the Notes using the effective interest method. The Company estimates the fair value of the term notes based on borrowing rates currently available for loans with similar terms (Level 2). At December 31, 2018, the fair value of the term notes was $16.7 million based on prevailing market rates for secured debt. 2023 Notes In January 2018, the Company issued $50.0 million in aggregate principal amount of 2023 Notes, and in February 2018, the Company issued an additional $3.0 million in aggregate principal amount of 2023 Notes. The 2023 Notes are general, unsecured, senior subordinated obligations and bear interest at a rate of 5.25% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2018. The 2023 Notes will mature on February 1, 2023, unless earlier repurchased or converted. Payment of the principal of, and accrued and unpaid interest, if any, on the maturity date, and the fundamental change repurchase price of (excluding cash payable in lieu of delivering fractional shares of common stock), the 2023 Notes is subordinated to the prior payment in full in cash or other payment satisfactory to the holders of senior debt, of all existing and future senior debt, which includes the Company’s indebtedness under the Amended and Restated Loan and Security Agreement with the Lenders and any refinancing thereof. The 2023 Notes are convertible into shares of the Company’s common stock at the option of the holders at any time prior to the close of business on the business day immediately preceding the maturity date. The conversion rate is initially 294.1176 shares of common stock per $1,000 principal amount of 2023 Notes (equivalent to an initial conversion price of approximately $3.40 per share of common stock), subject to customary adjustments. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock. In addition, following certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2023 Notes in connection with such a corporate event. In the second quarter of 2018, the Company issued 85,007 shares of common stock upon the conversion of $250,000 in aggregate principal amount of the 2023 Notes. As of December 31, 2018, the aggregate outstanding principal amount of the 2023 Notes was $52.7 million. The Company estimates the fair value of the 2023 Notes using commonly accepted valuation methodologies and market-risk measurements that are indirectly observable, such as credit risk (Level 2). At December 31, 2018, the fair value of the 2023 Notes, excluding the derivative liability, was $41.0 million The following are the scheduled maturities of the Term Loans and 2023 Notes as of December 31, 2018 (in thousands): 2019 $ 10,000 2020 5,000 2021 — 2022 — 2023 52,700 Total $ 67,700 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity (Deficit) | |
Stockholders' Equity (Deficit) | 12. In connection with our acquisition of Senseonics, Incorporated in December 2015 (the “Acquisition”), (i) all outstanding shares of common stock of Senseonics, $0.01 par value per share, were exchanged for 1,955,929 shares of the Company's common stock, $0.001 par value per share (reflecting an exchange ratio of 2.0975), (ii) all outstanding shares of preferred stock were converted into shares of common stock of Senseonics, and exchanged into 55,301,674 shares of the Company’s common stock, $0.001 par value per share, and (iii) all outstanding options and warrants to purchase shares of common stock of Senseonics were exchanged for or replaced with options and warrants to acquire shares of the Company’s common stock using the same exchange ratio. Common Stock At December 31, 2018, the Company had authorized 450,000,000 shares of common stock and 176,918,381 shares of common stock were issued and outstanding. Preferred Stock As of December 31, 2018 and 2017, the Company’s authorized capital stock included 5,000,000 shares and 0 shares of undesignated preferred stock, par value $0.001 per share, respectively. No shares of preferred stock were outstanding as of December 31, 2018 or 2017. Stock Purchase Warrants In connection with the issuance of the Notes, the Company also issued to the Lenders 10-year stock purchase warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock at exercise prices of $3.86, $2.38 and $1.86 per share, respectively. The fair value of the warrants, which the Company estimated to be $0.5 million, was recorded as a discount to the Notes. These warrants expire on June 30, 2026, November 22, 2026 and March 29, 2027, respectively, and are classified in equity. In connection with the Company’s original Loan and Security Agreement with Oxford in 2014, the Company issued to Oxford 10-year stock purchase warrants to purchase an aggregate of 167,570 shares of common stock at an exercise price of $1.79 per share. The fair value of the warrants, which the Company estimated to be $0.2 million, was recorded as a discount to the promissory notes issued to Oxford in connection with the original Loan and Security Agreement. These warrants expire on November 2, 2020, July 14, 2021 and August 19, 2021, and are classified in equity. The unamortized deferred financing fees and debt discount related to the notes rollover amount will be amortized along with the deferred financing costs and the discount created by the new issuance of the warrants over the term of the loan using the effective interest method. For the years ended December 31, 2018, 2017 and 2016, the Company recorded amortization of discount of debt of $0.2 million, $0.2 million, and $0.1 million, respectively, within interest expense in the accompanying statement of operations. Stock-Based Compensation In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”) under which incentive stock options and non-qualified stock options may be granted to the Company’s employees and certain other persons in accordance with the 2015 Plan provisions. In connection with the Offering, the Company’s board of directors adopted and the Company’s stockholders approved an Amended and Restated 2015 Equity Incentive Plan (the “amended and restated 2015 Plan”). The amended and restated 2015 plan became effective as of the date of the pricing of the Offering. The Company’s board of directors may terminate the amended and restated 2015 Plan at any time. Options granted under the amended and restated 2015 Plan expire ten years after the date of grant. Pursuant to the amended and restated 2015 Plan, the number of shares initially reserved for issuance pursuant to equity awards was 17,251,115 shares, representing 8,000,000 shares plus up to an additional 9,251,115 shares in the event that options that were outstanding under the Company’s equity incentive plans as of February 16, 2016 expire or otherwise terminate without having been exercised (in such case, the shares not acquired will revert to and become available for issuance under the amended and restated 2015 Plan). The number of shares of the Company’s common stock reserved for issuance under its amended and restated 2015 Plan will automatically increase on January 1 of each year, beginning on January 1, 2017 and ending on January 1, 2026, by 3.5% of the total number of shares of its common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by its board of directors. As of December 31, 2018, 752,493 shares remained available for grant under the amended and restated 2015 Plan. Effective January 1, 2019, by virtue of the automatic increase described above, the total number of shares remaining available for grant under the amended and restated 2015 Plan was increased to 6,944,635 shares. On May 8, 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan” and, together with the 2015 Plan, the “Plans”), under which incentive stock options and non-qualified stock options may be granted to the Company’s employees and certain other persons in accordance with the Plan provisions. The 1997 Plan was amended in September 2001, to clarify certain provisions regarding the method of exercise, amendment and termination of the 1997 Plan, and the effect of changes in capitalization of the Company. The Board of Directors, which administers the 1997 Plan, determines the number of options granted, the vesting period and the exercise price. The Board of Directors may terminate the 1997 Plan at any time. Options granted under the 1997 Plan expire ten years after the date of grant. The total number of shares of common stock that may be issued pursuant to options under the 1997 Plan may not exceed, in the aggregate, 9,175,860 shares of common stock, less any shares of common stock issued by the Company as restricted common stock. The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. Prior to the completion of the Acquisition, the fair value of the common stock was determined and approved by the Board of Directors after considering several factors, including the results obtained from an independent third-party valuation, the Company’s historical financial performance and financial position, the Company’s future prospects and opportunity for liquidity events, the price per share of its convertible preferred stock offerings and general industry and economic trends. In establishing the estimated fair value of the common stock, the Company considered the guidance set forth in American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Subsequent to the completion of the Acquisition, the fair value of the common stock was obtained from quoted market prices on the Over-the-Counter Bulletin Board (OTCBB) as provided by OTC Market Groups, Inc. Fair value is estimated at each grant date using the Black-Scholes Model with assumptions summarized in the following table: For the year ended December 31, 2018 2017 2016 Expected term of options 6.5 years 6.5 years 6.5 years Expected volatility rate 63.52 - 66.95 % 60.66 - 75.43 % 58.99 - 61.39 % Risk-free rate 2.45 - 3.08 % 1.90 - 2.30 % 1.40 - 2.30 % Expected dividend yield 0 % 0 % 0 % The risk-free interest rate assumption is based upon observed U.S. treasury yields for a period consistent with the expected term of the Company’s employee stock options. The expected term is the period of time for which the stock-based options are expected to be outstanding. Given the lack of historic exercise data, the expected life is determined using the “simplified method” which is defined as the mid-point between the vesting date and the end of the contractual term. The Company does not pay a dividend, and is not expected to pay a dividend in the foreseeable future. Due to a lack of a public market for the Company’s common stock for an extended period of time, the Company utilized comparable public companies’ volatility rates as a proxy of its expected volatility for purposes of the Black-Scholes Model. Stock-based compensation expense is recorded monthly and is adjusted periodically for actual forfeitures. Pre-vesting forfeitures are based on the Company’s actual forfeitures for the years ended December 31, 2018 and 2017 and have not been material. Employee stock-based compensation expense for employee granted stock options was $6.4 million, $4.1 million, and $3.6 million for the years ended December 31, 2018 and 2017 and 2016, respectively, classified as follows (in thousands): Year Ended December 31, 2018 2017 2016 Sales and marketing $ 1,685 $ 509 $ 202 Research and development 1,364 930 518 General and administrative 3,326 2,659 2,865 Total stock-based compensation $ 6,375 $ 4,098 $ 3,585 Stock-based compensation expense for restricted stock awards was $0.3 million, $0.3 million, and $1.6 million for the years ended December 31, 2018, 2017 and 2016 respectively, all of which was classified as administrative expense in the accompanying consolidated statements of operations. As of December 31, 2018, there was $15.8 million of total unrecognized compensation cost related to non-vested employee stock option awards, which is expected to be recognized over a weighted average period of 2.88 years. There was no unrecognized compensation cost related to non-vested restricted stock awards as of December 31, 2018. Stock option activity under the Plans during the years ended December 31, 2018 and 2017 is as follows: Weighted- Weighted- Average Number of Average Remaining Shares in Exercise Contractual (in thousands) Price Life (in years) Options outstanding as of December 31, 2016 11,389 $ 1.26 Options granted 5,674 $ 2.24 Options exercised (509) $ 0.64 Options canceled/forfeited (159) $ 2.47 Options outstanding as of December 31, 2017 16,395 $ 1.61 Options granted 7,533 $ 3.03 Options exercised (1,439) $ 1.20 Options canceled/forfeited (1,031) $ 2.43 Options outstanding as of December 31, 2018 21,458 6.68 Options vested and expected to vest as of December 31, 2018 21,458 $ 2.10 Options exercisable as of December 31, 2018 11,637 $ 1.47 5.27 The weighted average grant-date fair value of stock option awards granted in 2018, 2017 and 2016 was $1.91, $1.36, and $1.76 per share, respectively. For the years ended December 31, 2018 and 2017 and 2016, 1,438,671, 508,625, and 268,670 options were exercised, respectively, with an aggregate intrinsic value at the time of exercise of $3.7 million, $1.0 million, and $0.7 million, respectively. The total fair value of options that vested during 2018 and 2017 were approximately $5.4 million and $3.6 million, respectively. The aggregate intrinsic value of the options currently exercisable at December 31, 2018 was $14.0 million. The aggregate intrinsic value of stock options outstanding at December 31, 2018 was $15.4 million, which approximated the aggregate intrinsic value of options vested and expected to vest as of December 31, 2018. The weighted average grant date fair value of the unvested stock option awards outstanding at December 31, 2018 and 2017 was $1.76 and $1.25 per share, respectively. The weighted average grant date fair value of the stock option awards vested, exercised and forfeited/cancelled for the year ended December 31, 2018 were $1.20, $0.92 and $1.46 per share, respectively. Restricted Stock Awards The Company issued 398,525 shares of restricted stock to the chairman of the Company’s board of directors (the “Chairman”) in December 2015, half of which were vested upon grant and half of which vested upon the completion of the Offering, pursuant to an agreement between the Company and the Chairman, as described in greater detail in Note 14. In June 2016, the Company issued a fully vested restricted stock award for 300,000 shares of common stock to the Chairman to settle the outstanding obligations under the agreement. The Company recognized stock-based compensation expense of $1.2 million in the year ended December 31, 2016, related to the grant and vesting of this restricted stock. The Company issued 91,786 shares of fully vested restricted stock in lieu of cash payment to members of the board of directors and consultants for services performed during 2018. Additionally, the Company granted 23,450 shares of restricted stock in 2017, which vest on a straight-line basis over the requisite service period through 2018, to an employee in lieu of cash payment for services performed while employed by the Company. A summary of the Company’s restricted stock award activity for the year ended December 31, 2018 is presented below: Weighted- Number Average of Shares Grant Price Restricted Stock Awards nonvested at December 31, 2017 18,760 Granted 91,786 $ 3.40 Vested 110,546 $ 3.26 Cancelled and forfeited — $ — Restricted Stock Awards nonvested at December 31, 2018 — For the year ended December 31, 2018, the weighted average share price on date of exercise for restricted stock awards was $3.40. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | 13. No provision for U.S. federal or state income taxes has been recorded as the Company has incurred net operating losses since inception and provides a full valuation allowance against its net deferred income tax assets. The tax effect of temporary differences that give rise to the net deferred income tax asset at December 31, 2018 and 2017 is as follows (in thousands): December 31, Deferred income tax assets (liabilities ) 2018 2017 Deferred Tax Assets: Net operating loss carryforwards $ 67,823 $ 54,748 Capitalized start-up costs 10,487 13,229 R&E credit carryforwards 7,875 6,680 Stock-based compensation 2,024 1,508 Change in fair value of derivative liability 3,978 — Other 355 265 Total deferred tax asset 92,542 76,430 Deferred tax liabilities: Amortization of debt discount (3,419) — Net deferred tax assets before valuation allowance 89,123 76,430 Valuation allowance (89,123) (76,430) Net deferred tax assets $ — $ — The net change in valuation allowance for the years ended December 31, 2018 and 2017 was a net increase of $12.7 million and a net decrease of $7.3 million, respectively. The increase in valuation allowance is primarily due to net losses and credits incurred in 2018. This increase in valuation allowance is based on management's assessment that it is more likely than not that the Company will not realize these deferred tax assets. Capitalized start-up costs represent expenses incurred in the organization and start-up of the Company. For U.S. federal and state tax purposes, start-up and organizational costs incurred before October 22, 2004 will be amortized over sixty months and those incurred on and after October 22, 2004 will be amortized over one hundred and eighty months beginning in the current year. At December 31, 2018, the Company had NOL carryforwards of $291.4 million and had research and experimental credit carryforwards of $7.9 million. These carryforwards will expire in varying amounts between 2019 and 2038. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may result in a limitation on the amount of NOL carryforwards and research and development credit carryforwards which can be available in future years. No income tax benefit was recognized in the Company’s Statement of Operations for stock-based compensation arrangements due to the Company’s net loss position. A reconciliation of the Company’s estimated U.S. federal statutory rate to the Company’s effective income tax rate for the years ended December 31, 2018, 2017 and 2016 is as follows: Year Ended December 31, 2018 2017 2016 Tax at U.S. Federal Statutory rate 21.00 % 34.00 % 34.00 % State taxes, net 2.27 5.15 5.45 Research and development credit 1.27 1.79 1.82 Tax reform — (52.54) — State tax rates changes (10.64) — — Other non-deductible items (0.39) (0.86) 0.07 Increase (decrease) in valuation allowance (13.51) 12.46 (41.34) Effective income tax rate 0.00 % 0.00 % 0.00 % Deferred income taxes reflect temporary differences in the recognition of revenue and expense for tax reporting and financial statement purposes. Deferred tax liabilities and assets are adjusted for changes in tax laws or tax rates of the various tax jurisdictions as of the enacted date. The federal tax rate used to calculate deferred tax liabilities and assets as of December 31, 2016 was 34%. The Tax Cuts and Jobs (the “Act”) was enacted into law as of December 22, 2017. Among other provisions, the Act reduced the federal tax rate to 21% effective for the Company as of January 1, 2018. The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company's deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate. As a result of the tax rate, the Company’s deferred tax assets were decreased by $30.8 million and the valuation allowance was decreased by the same amount, resulting in no net tax expense. The Company recognized the income tax effects of the Act in its financial statements for the year ended December 31, 2017 in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the Act was signed into law. In accordance with Staff Accounting Bulletin No. 118, as of December 31, 2018, the Company has completed our accounting for the tax effects of enactment of the Act and no adjustments to the provisional income tax effects were required. A breakdown of the Company’s uncertain tax position during 2018, 2017 and 2016 is as follows (in thousands): 2018 2017 2016 Gross unrecognized tax benefit at beginning of year $ 1,670 $ 1,383 $ 1,174 Increase from tax positions taken in prior years — 22 9 Increase from tax positions in current year 323 265 200 Lapse of statute of limitations / expiration (24) — — Gross unrecognized tax benefit at end of year $ 1,969 $ 1,670 $ 1,383 The Company did not incur any penalties or interest payable to taxing authorities in 2018, 2017 and 2016. The Company’s U.S. Federal and state income tax returns from 1999 to 2017 remain subject to examination by the tax authorities. The Company’s prior tax years remain open for examination, even though the statute of limitations has expired, due to the net operating losses and credits carried forward for use in prospective years. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | 14. Related Party Transactions Roche Holding A.G, through their ownership interests in Roche Finance Ltd, has a noncontrolling ownership interest in the Company. For the years ended December 31, 2018 and 2017, revenues from Roche were $16.2 million and $5.8 million, respectively, and amounts due from them were $6.3 million and $3.3 million, respectively. In December 2015, the Chairman received a restricted stock award of 398,525 shares of common stock pursuant to an agreement entered into with the Company (the “December Agreement”) that superseded a pre-existing agreement. One half of the shares covered by this restricted stock award were fully vested on grant. The remainder vested in full upon the completion of the Company’s Offering, which was the specific performance condition of the award. Additionally, as a result of the completion of the Offering, pursuant to the December Agreement, the Chairman was entitled to receive estimated compensation in the amount of $0.8 million. In June 2016, the Chairman received a restricted stock award of 300,000 shares of common stock pursuant to an agreement entered into with the Company that superseded the December Agreement and satisfied the outstanding compensation obligation under the December Agreement. All of the shares covered by this restricted stock award were fully vested on date of grant. As described in Note 11, on December 7, 2015, the Company entered into a note purchase agreement with a stockholder, Energy Capital, pursuant to which the Company could borrow an aggregate principal amount of up to $10.0 million from Energy Capital. During the year ended December 31, 2016, the Company borrowed an aggregate of $2.5 million from Energy Capital under the facility, which was repaid in full in 2016 and the facility was terminated. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 15. Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: · Level 1 - Quoted prices in active markets for identical assets or liabilities. · Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The fair value of money market funds was derived from quoted prices in active markets for identical assets. The valuation technique used to measure the fair value of the Company’s debt instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has segregated its financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The inputs used in measuring the fair value of the Company’s money market funds included in cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of the funds. The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31, 2018 and 2017 (in thousands): December 31, 2018 Total Level 1 Level 2 Level 3 Liabilities Embedded conversion option $ 17,091 $ — $ — $ 17,091 December 31, 2017 Total Level 1 Level 2 Level 3 Assets Money market funds $ 4,706 $ 4,706 $ — $ — Government and agency securities 7,987 — 7,987 — Corporate debt securities 17,708 — 17,708 — The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Embedded Features of the 2023 Notes December 31, 2017 $ — Issuance of the 2023 Notes 17,300 Change in fair value included in other income (expense) (209) December 31, 2018 $ 17,091 The recurring Level 3 fair value measurements of the embedded features of the 2023 Notes, using the binomial valuation technique, include the following significant unobservable inputs: Unobservable Inputs Assumptions Discount rate 13.2 % Stock price volatility 67 % Risk free rate 2.5 % Dividend yield — % The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain financial instruments within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused the transfer occurs. There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2018 and 2017. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement . Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The Company has no financial assets and liabilities that are measured at fair value on a non-recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has no non-financial assets and liabilities that are measured at fair value on a recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The Company measures its long-lived assets, including property and equipment, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be impaired. No such fair value impairment was recognized in 2018, 2017, and 2016. |
Selected Quarterly Information
Selected Quarterly Information (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | 16. Quarterly financial information for fiscal years 2018 and 2017 is presented in the following table (in thousands, except per share data): For the Quarter Ended March 31 June 30 September 30 December 31 2018: Revenue, primarily from a related party $ 2,946 $ 3,623 $ 5,158 $ 7,186 Gross profit $ (362) $ (216) $ (2,584) $ (4,984) Operating expenses $ 15,565 $ 19,848 $ 20,391 $ 23,628 Operating loss $ 15,927 $ 20,064 $ 22,975 $ 28,612 Net loss $ 22,273 $ 32,496 $ 31,881 $ 7,321 Basic and diluted net loss per share (1) $ (0.16) $ (0.23) $ (0.18) $ (0.04) 2017: Revenue, primarily from a related party $ 553 $ 814 $ 2,097 $ 2,909 Gross profit $ (492) $ (900) $ (860) $ (1,133) Operating expenses $ 11,905 $ 10,741 $ 15,745 $ 14,537 Operating loss $ 12,397 $ 11,641 $ 16,605 $ 15,670 Net loss $ 13,073 $ 12,374 $ 17,379 $ 16,275 Basic and diluted net loss per share (1) $ (0.14) $ (0.12) $ (0.13) $ (0.12) (1) Net loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly per-share calculations will not necessarily equal the annual per share calculation. |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2018 | |
Litigation | |
Litigation | 17. Litigation From time to time, the Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company has evaluated claims in accordance with the accounting guidance for contingencies that it deems both probable and reasonably estimable and, accordingly, has recorded aggregate liabilities for all claims of approximately $0, $0, and $40,000 as of December 31, 2018, 2017 and 2016, respectively. These amounts are reported on the consolidated balance sheets within accrued and other liabilities and other noncurrent liabilities. The Company believes, based upon information it currently possesses and considering established accruals for liabilities and its insurance coverage, that the ultimate outcome of these proceedings and actions is unlikely to have a material effect on the Company's consolidated financial statements. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events | |
Subsequent Events | 18. Subsequent Events On January 31, 2019, the Company entered into an amendment to its distribution agreement (the “Amendment”) with Roche Diagnostics International AG and Roche Diabetes Care GmbH (collectively, “Roche”), which amends that certain distribution agreement, by and between the Company and Roche, dated May 23, 2016, as amended (the “Distribution Agreement”). Pursuant to the Amendment, the term of the Distribution Agreement has been extended through January 31, 2021. The parties have agreed to certain purchases of Eversense and pricing terms for the extended term of the Distribution Agreement. In addition, Roche ’ s role as the exclusive distributor of Eversense has been expanded to provide Roche with exclusive distribution rights in 17 additional countries, including Brazil, Russia, India and China, as well as select markets in the Asia Pacific and Latin American regions. Except as modified by the Amendment, the material terms and conditions of the Distribution Agreement remain in full force and effect. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements reflect the accounts of Senseonics Holdings and its wholly-owned subsidiary Senseonics. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, depreciable lives of property and equipment, and estimated accruals for preclinical study costs, which are accrued based on estimates of work performed under contracts. Actual results could differ from those estimates; however management does not believe that such differences would be material. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, glucose monitoring products. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the years ended December 31, 2018, 2017 and 2016, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. |
Cash and Cash Equivalents and Concentration of Credit Risk | Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company’s cash and cash equivalents potentially subject the Company to credit and liquidity risk. The Company maintains cash deposits at major financial institutions with high credit quality and, at times, the balances of those deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed the federally insured amounts. |
Concentration of Revenues and Customers | Concentration of Revenues and Customers At any given time, the Company’s trade receivables are concentrated among a small number of principal customers. If any of the Company’s customers fail to perform their obligations under the terms of these financial instruments, the Company’s maximum exposure to potential losses would be equal to amounts reported on its consolidated balance sheets. During the years ended December 2018 and 2017, the Company derived a majority of its total revenue from two customers. During the year ended December 2018, the Company derived 86 percent of its total revenue from one of those two customers. Total revenues from Roche Diabetes Care GmbH were $16.2 million. Revenues by geographic region The following table sets forth revenues derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the year ended December 31, 2018. All of the Company’s revenues were earned from sales outside of the United States for the years ended December 31, 2017 and 2016. Year Ended December 31, 2018 % (Dollars in thousands) Amount of Total Revenues: Outside of the United States $ 17,498 % United States 1,415 Total $ 18,913 % |
Marketable Securities | Marketable Securities Marketable securities consist of government and agency securities and corporate debt securities. The Company’s investments are classified as available for sale. Such securities are carried at fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. |
Inventory | Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company periodically reviews inventory to determine if a write down is necessary for inventory that has become obsolete, inventory that has a cost basis less than net realizable value, and inventory in excess of future demand taking into consideration the product shelf life. |
Accounts Receivable | Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which is between three to five years for laboratory equipment, between five to seven years for office furniture and equipment, and the shorter of lease term or useful life for leasehold improvements. Upon disposition of the assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Repairs and maintenance costs are included as expense in the accompanying statement of operations. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management did not identify any indicators of impairment in 2018, 2017, and 2016. |
Derivative Financial Instruments | Derivative Financial Instruments In connection with the Company’s issuance of the 2023 Notes in January 2018, the Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in the Company’s consolidated balance sheets in accordance with Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging . The financial instrument is remeasured at the end of each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense) as change in fair value of 2023 derivative. |
Warranty Reserve | Warranty Reserve The Company may replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs associated with a product are recorded at the time of shipment. The Company estimates future replacement costs by analyzing historical replacement experience for the timing and amount of returned product, and the Company evaluates the reserve quarterly and makes adjustments when appropriate. At December 31, 2018 and December 31, 2017, the warranty reserve was $0.8 million and $0.8 million, respectively. The following table provides a reconciliation of the change in estimated warranty liabilities for the years ended December 31, 2018 and 2017: December 31, (Dollars in thousands) 2018 2017 Balance at beginning of the year $ 813 $ 67 Provision for warranties during the period 1,119 813 Settlements made during the period (157) (20) Net changes in liability for pre-existing warranties, including expirations and changes in estimate (959) (47) Balance at end of the year $ 816 $ 813 |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers , using the full retrospective transition method. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company generates product revenue from sales of the Eversense system and related components and supplies at a fixed price to third-party distributors in the European Union and to a network of strategic fulfillment partners in the United States (collectively, “Customers”) who then resell the products to health care providers and patients. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenues from product sales are recognized when the Customers obtain control of the Company’s product, which occurs at a point in time, based upon the delivery terms as defined in the distributor agreement. The Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. The Company offers no discounts, rebates, rights of return, or other allowances to the Customers which would result in the establishment of reserves against product revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a Customer contract. |
Cost of Sales and Shipping and Handling Expenses | Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales includes raw materials, contract manufacturing service fees, reserves for expected warranty costs, reserves for inventory valuation, scrap, and shipping and handling expenses associated with product delivery. Shipping and Handling Expenses Shipping and handling expenses associated with product delivery are included within cost of sales in the Company’s consolidated statements of operations. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses include costs related to employee compensation, preclinical and clinical trials, manufacturing, supplies, outsource testing, consulting and depreciation and other facilities-related expenses. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. The Company uses the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of stock-option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, future volatility of the Company’s stock price, dividend yields, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can affect the fair value estimate. Under ASC 718, the cumulative amount of compensation cost recognized for instruments classified as equity that ordinarily would result in a future tax deduction under existing tax law shall be considered to be a deductible difference in applying ASC 740 , Income Taxes . The deductible temporary difference is based on the compensation cost recognized for financial reporting purposes; however, these provisions currently do not impact the Company, as all the deferred tax assets have a full valuation allowance. Since the Company had net operating loss (“NOL”) carryforwards as of December 31, 2018 and 2017, no excess tax benefits for the tax deductions related to share-based awards were recognized in the statements of operations. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company did not have any amounts accrued relating to interest and penalties as of December 31, 2018 and 2017. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 1998 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the net operating losses and research and development credit carryforwards that may be used in future years are still subject to adjustment. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. Based on the borrowing rates currently available for loans with similar terms, the Company believes that the fair value of its long-term notes payable approximates their carrying value. The fair values of the Company’s marketable investments are reported in Note 15 —Fair Value Measurements . |
Net Loss per Share | Net Loss per Share Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potential common shares is anti-dilutive. The total number of anti-dilutive shares at December 31, 2018, 2017 and 2016, consisting of common stock options and stock purchase warrants, which have been excluded from the computation of diluted loss per share, was as follows: 2018 2017 2016 Stock-based awards 21,457,946 16,413,840 11,389,773 2023 Notes 20,480,638 — — Warrants 4,071,581 4,427,086 5,184,988 Total anti-dilutive shares outstanding 46,010,165 20,840,926 16,574,761 For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition , and creates a new ASC Topic 606, Revenue from Contracts with Customers . In 2015 and 2016, the FASB issued additional ASUs related to ASC Topic 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. The Company adopted this new standard on January 1, 2018 using the full retrospective transition method. The adoption of the new standard did not materially impact the amounts reported in the Company’s consolidated financial statements and there were no other significant changes impacting the timing or measurement of revenues or the Company’s business process and controls. In January 2016, the FASB issued ASU 2016-01, guidance on the classification and measurement of financial instruments. This ASU was further amended in February 2018 by ASU 2018-03. The guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. The guidance also amends certain disclosure requirements associated with the fair value of financial instruments. The Company adopted this new standard on January 1, 2018. The adoption of this guidance did not have a significant impact on the Company’s financial statements. In August 2016, the FASB issued ASU 2016-15, guidance on the classification of certain cash receipts and cash payments in the statements of cash flows, including those related to debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, and distributions received from equity method investees. The Company adopted this new standard on January 1, 2018 on a retrospective basis. The adoption of the new standard did not impact the amounts reported in the Company’s consolidated statements of cash flows. Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. In July 2018, the FASB issued ASU 2018-11 to provide another transition method, allowing a cumulative effect adjustment to the opening balance of retained earnings during the period of adoption. The guidance is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company will adopt the guidance on January 1, 2019. The Company has substantially completed the process of reviewing its lease agreements and evaluating the impact of the lease guidance on its consolidated financial statements. The Company is still in the process of reviewing its contract manufacturing agreements for embedded leases. The Company does not anticipate recording right of use assets and lease liabilities greater than 5% of total assets and total liabilities, respectively, upon adoption of this guidance. In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share-based payments made to nonemployees so the accounting for such payments is substantially the same as those made to employees. Under the guidance, share based awards to nonemployees will be measured at fair value on the grant date of the awards, entities will need to assess the probability of satisfying performance conditions if any are present, and awards will continue to be classified according to ASC 718 upon vesting which eliminates the need to reassess classification upon vesting, consistent with awards granted to employees. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The Company will adopt the guidance on January 1, 2019. The Company has determined that the guidance will not have a significant impact on its consolidated financial statements. The Company has evaluated all other issued unadopted Accounting Standards Updates and believes the adoption of these standards will not have a material impact on its consolidated statements of operations, balance sheets, or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of revenues by geographic regions | Year Ended December 31, 2018 % (Dollars in thousands) Amount of Total Revenues: Outside of the United States $ 17,498 % United States 1,415 Total $ 18,913 % |
Schedule of warranty reserve | December 31, (Dollars in thousands) 2018 2017 Balance at beginning of the year $ 813 $ 67 Provision for warranties during the period 1,119 813 Settlements made during the period (157) (20) Net changes in liability for pre-existing warranties, including expirations and changes in estimate (959) (47) Balance at end of the year $ 816 $ 813 |
Schedule of anti-dilutive shares which have been excluded from the computation of diluted loss per share | 2018 2017 2016 Stock-based awards 21,457,946 16,413,840 11,389,773 2023 Notes 20,480,638 — — Warrants 4,071,581 4,427,086 5,184,988 Total anti-dilutive shares outstanding 46,010,165 20,840,926 16,574,761 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Marketable Securities | |
Schedule of marketable securities available for sale | Marketable securities available for sale as of December 31, 2017 were as follows (in thousands): December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Government and agency securities $ 5,990 $ — $ — $ 5,990 Corporate debt securities 14,310 — — 14,310 Total $ 20,300 $ — $ — $ 20,300 |
Inventory, net (Tables)
Inventory, net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory, net | |
Schedule of Inventory, net | Inventory, net consisted of the following (in thousands): December 31, 2018 2017 Finished goods $ 1,457 $ 375 Work-in-process 7,211 2,150 Raw materials 1,563 466 Total $ 10,231 $ 2,991 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 2017 Contract manufacturing $ 2,962 $ 1,601 Marketing and sales 287 93 IT and software 244 214 Interest receivable 239 4 Clinical and preclinical 111 35 Other 142 145 Total prepaid expenses and other current assets $ 3,985 $ 2,092 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment, net | |
Schedule of property and equipment, net | Property and equipment consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 2017 Laboratory equipment $ 2,132 $ 1,019 Office furniture and equipment 122 87 Leased equipment 159 159 Leasehold improvements 647 628 3,060 1,893 Less: Accumulated depreciation (1,310) (1,040) Property and equipment, net $ 1,750 $ 853 |
Other Balance Sheet Details (Ta
Other Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Balance Sheet Details | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following as of December 31, 2018 and 2017 (in thousands): December 31, 2018 2017 Contract manufacturing $ 6,068 $ 1,209 Compensation and benefits 3,685 2,209 Interest on notes payable and 2023 Notes 1,268 180 Product warranty 816 813 Sales and marketing services 738 25 Professional services 727 917 Clinical and preclinical 147 55 Other 402 20 Total accrued expenses and other current liabilities $ 13,851 $ 5,428 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Schedule of operating lease future minimum lease payments | The contractually required cash payments under these leases at December 31, 2018 are as follows (in thousands): 2019 $ 611 2020 629 2021 648 2022 668 2023 282 Total minimum lease payments $ 2,838 |
Notes Payable and Stock Purch_2
Notes Payable and Stock Purchase Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable and Stock Purchase Warrants | |
Schedule of future maturities | 2019 $ 10,000 2020 5,000 2021 — 2022 — 2023 52,700 Total $ 67,700 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity (Deficit) | |
Schedule of assumptions of Black-Scholes option pricing model | For the year ended December 31, 2018 2017 2016 Expected term of options 6.5 years 6.5 years 6.5 years Expected volatility rate 63.52 - 66.95 % 60.66 - 75.43 % 58.99 - 61.39 % Risk-free rate 2.45 - 3.08 % 1.90 - 2.30 % 1.40 - 2.30 % Expected dividend yield 0 % 0 % 0 % |
Schedule of employee stock-based compensation expense | Year Ended December 31, 2018 2017 2016 Sales and marketing $ 1,685 $ 509 $ 202 Research and development 1,364 930 518 General and administrative 3,326 2,659 2,865 Total stock-based compensation $ 6,375 $ 4,098 $ 3,585 |
Schedule of stock option activity | Weighted- Weighted- Average Number of Average Remaining Shares in Exercise Contractual (in thousands) Price Life (in years) Options outstanding as of December 31, 2016 11,389 $ 1.26 Options granted 5,674 $ 2.24 Options exercised (509) $ 0.64 Options canceled/forfeited (159) $ 2.47 Options outstanding as of December 31, 2017 16,395 $ 1.61 Options granted 7,533 $ 3.03 Options exercised (1,439) $ 1.20 Options canceled/forfeited (1,031) $ 2.43 Options outstanding as of December 31, 2018 21,458 6.68 Options vested and expected to vest as of December 31, 2018 21,458 $ 2.10 Options exercisable as of December 31, 2018 11,637 $ 1.47 5.27 |
Schedule of restricted stock award activity | Weighted- Number Average of Shares Grant Price Restricted Stock Awards nonvested at December 31, 2017 18,760 Granted 91,786 $ 3.40 Vested 110,546 $ 3.26 Cancelled and forfeited — $ — Restricted Stock Awards nonvested at December 31, 2018 — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of deferred income tax assets and liabilities | The tax effect of temporary differences that give rise to the net deferred income tax asset at December 31, 2018 and 2017 is as follows (in thousands): December 31, Deferred income tax assets (liabilities ) 2018 2017 Deferred Tax Assets: Net operating loss carryforwards $ 67,823 $ 54,748 Capitalized start-up costs 10,487 13,229 R&E credit carryforwards 7,875 6,680 Stock-based compensation 2,024 1,508 Change in fair value of derivative liability 3,978 — Other 355 265 Total deferred tax asset 92,542 76,430 Deferred tax liabilities: Amortization of debt discount (3,419) — Net deferred tax assets before valuation allowance 89,123 76,430 Valuation allowance (89,123) (76,430) Net deferred tax assets $ — $ — |
Schedule of reconciliation of U.S. federal statutory rate to Company's effective tax rate | Year Ended December 31, 2018 2017 2016 Tax at U.S. Federal Statutory rate 21.00 % 34.00 % 34.00 % State taxes, net 2.27 5.15 5.45 Research and development credit 1.27 1.79 1.82 Tax reform — (52.54) — State tax rates changes (10.64) — — Other non-deductible items (0.39) (0.86) 0.07 Increase (decrease) in valuation allowance (13.51) 12.46 (41.34) Effective income tax rate 0.00 % 0.00 % 0.00 % |
Schedule of uncertain tax positions | A breakdown of the Company’s uncertain tax position during 2018, 2017 and 2016 is as follows (in thousands): 2018 2017 2016 Gross unrecognized tax benefit at beginning of year $ 1,670 $ 1,383 $ 1,174 Increase from tax positions taken in prior years — 22 9 Increase from tax positions in current year 323 265 200 Lapse of statute of limitations / expiration (24) — — Gross unrecognized tax benefit at end of year $ 1,969 $ 1,670 $ 1,383 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Schedule of fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis | The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31, 2018 and 2017 (in thousands): December 31, 2018 Total Level 1 Level 2 Level 3 Liabilities Embedded conversion option $ 17,091 $ — $ — $ 17,091 December 31, 2017 Total Level 1 Level 2 Level 3 Assets Money market funds $ 4,706 $ 4,706 $ — $ — Government and agency securities 7,987 — 7,987 — Corporate debt securities 17,708 — 17,708 — |
Schedule of changes in the fair value of Level 3 derivative liability measured at fair value on a recurring basis | The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Embedded Features of the 2023 Notes December 31, 2017 $ — Issuance of the 2023 Notes 17,300 Change in fair value included in other income (expense) (209) December 31, 2018 $ 17,091 |
Schedule of assumptions used to determine fair value of 2023 notes | Unobservable Inputs Assumptions Discount rate 13.2 % Stock price volatility 67 % Risk free rate 2.5 % Dividend yield — % |
Selected Quarterly Informatio_2
Selected Quarterly Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of selected quarterly financial information | For the Quarter Ended March 31 June 30 September 30 December 31 2018: Revenue, primarily from a related party $ 2,946 $ 3,623 $ 5,158 $ 7,186 Gross profit $ (362) $ (216) $ (2,584) $ (4,984) Operating expenses $ 15,565 $ 19,848 $ 20,391 $ 23,628 Operating loss $ 15,927 $ 20,064 $ 22,975 $ 28,612 Net loss $ 22,273 $ 32,496 $ 31,881 $ 7,321 Basic and diluted net loss per share (1) $ (0.16) $ (0.23) $ (0.18) $ (0.04) 2017: Revenue, primarily from a related party $ 553 $ 814 $ 2,097 $ 2,909 Gross profit $ (492) $ (900) $ (860) $ (1,133) Operating expenses $ 11,905 $ 10,741 $ 15,745 $ 14,537 Operating loss $ 12,397 $ 11,641 $ 16,605 $ 15,670 Net loss $ 13,073 $ 12,374 $ 17,379 $ 16,275 Basic and diluted net loss per share (1) $ (0.14) $ (0.12) $ (0.13) $ (0.12) (1) Net loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly per-share calculations will not necessarily equal the annual per share calculation. |
Liquidity - Offering (Details)
Liquidity - Offering (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 28, 2018 | Aug. 23, 2017 | Jun. 01, 2017 | Mar. 29, 2017 | Nov. 22, 2016 | Jun. 30, 2016 | Mar. 23, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Recent Significant Transaction | |||||||||
Proceeds from Notes Payable | $ 5,000 | $ 22,500 | |||||||
March 2016 Offering | |||||||||
Recent Significant Transaction | |||||||||
Shares issued (in shares) | 15,800,000 | ||||||||
Price per share (in dollars per share) | $ 2.85 | ||||||||
May 2017 Offering | |||||||||
Recent Significant Transaction | |||||||||
Shares issued (in shares) | 29,078,014 | ||||||||
Price per share (in dollars per share) | $ 1.41 | ||||||||
Proceeds from issuance of common stock, net of issuance costs | $ 40,400 | ||||||||
August 2017 Offering | |||||||||
Recent Significant Transaction | |||||||||
Shares issued (in shares) | 13,383,125 | ||||||||
Price per share (in dollars per share) | $ 2.15 | ||||||||
Proceeds from issuance of common stock, net of issuance costs | $ 26,500 | ||||||||
June 2018 Offering | |||||||||
Recent Significant Transaction | |||||||||
Shares issued (in shares) | 38,076,561 | ||||||||
Price per share (in dollars per share) | $ 3.93 | ||||||||
Proceeds from issuance of common stock, net of issuance costs | $ 149,000 | ||||||||
March 2016 IPO and Underwriters' Option | |||||||||
Recent Significant Transaction | |||||||||
Proceeds from issuance of common stock, net of issuance costs | $ 44,800 | ||||||||
Underwriters' discounts and commissions | 2,700 | ||||||||
Additional offering related costs | $ 1,400 | ||||||||
Oxford Notes | |||||||||
Recent Significant Transaction | |||||||||
Repayments of Secured Debt | $ 11,000 | ||||||||
Payments of Debt Extinguishment Costs | 1,000 | ||||||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | |||||||||
Recent Significant Transaction | |||||||||
Maximum amount available under facility | 30,000 | ||||||||
Tranche 1 Term Loan | |||||||||
Recent Significant Transaction | |||||||||
Proceeds from Notes Payable | 15,000 | ||||||||
Tranche 1 Term Loan | Amended and Restated Loan and Security Agreement | |||||||||
Recent Significant Transaction | |||||||||
Proceeds from Notes Payable | $ 15,000 | ||||||||
Tranche 2 Term Loan | Amended and Restated Loan and Security Agreement | |||||||||
Recent Significant Transaction | |||||||||
Proceeds from Notes Payable | $ 5,000 | ||||||||
Tranche 3 Term Loan | Amended and Restated Loan and Security Agreement | |||||||||
Recent Significant Transaction | |||||||||
Proceeds from Notes Payable | $ 5,000 |
Liquidity - 2023 Notes (Details
Liquidity - 2023 Notes (Details) - USD ($) $ in Millions | Feb. 28, 2018 | Jan. 31, 2018 |
2023 Notes | ||
Convertible Notes | ||
Principal amount | $ 3 | $ 50 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Segment Information (Details) | 12 Months Ended |
Dec. 31, 2018segment | |
Segment Information | |
Number of operating segments | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Concentration of Revenues and Customers (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)customeritem | Dec. 31, 2017USD ($)customer | Dec. 31, 2016USD ($) | |
Estimated total revenues from major customers | |||||||||||
FDIC maximum | $ 250 | ||||||||||
Number of customers | customer | 2 | 2 | |||||||||
Number of geographical markets | item | 2 | ||||||||||
Revenue | $ 7,186 | $ 5,158 | $ 3,623 | $ 2,946 | $ 2,909 | $ 2,097 | $ 814 | $ 553 | $ 18,913 | $ 6,373 | $ 332 |
Revenue | Customer Concentration Risk | |||||||||||
Estimated total revenues from major customers | |||||||||||
Percentage of total revenue | 86.00% | ||||||||||
Number of customers | customer | 1 | ||||||||||
Revenue | Customer Concentration Risk | Roche Diabetes Care (related party) | |||||||||||
Estimated total revenues from major customers | |||||||||||
Revenue | $ 16,200 | ||||||||||
Revenue | Geographic Concentration Risk | |||||||||||
Estimated total revenues from major customers | |||||||||||
Percentage of total revenue | 100.00% | ||||||||||
Revenue | $ 18,913 | ||||||||||
Outside of the United States | Revenue | Geographic Concentration Risk | |||||||||||
Estimated total revenues from major customers | |||||||||||
Percentage of total revenue | 92.52% | ||||||||||
Revenue | $ 17,498 | ||||||||||
United States | Revenue | Geographic Concentration Risk | |||||||||||
Estimated total revenues from major customers | |||||||||||
Percentage of total revenue | 7.48% | ||||||||||
Revenue | $ 1,415 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Laboratory equipment | Minimum | |
Property and Equipment, net | |
Useful lives | 3 years |
Laboratory equipment | Maximum | |
Property and Equipment, net | |
Useful lives | 5 years |
Office furniture and equipment | Minimum | |
Property and Equipment, net | |
Useful lives | 5 years |
Office furniture and equipment | Maximum | |
Property and Equipment, net | |
Useful lives | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Summary of Significant Accounting Policies | |
Payment period | 60 days |
Discounts, rebates, rights of return or other allowances | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Stock-Based Compensation and Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-Based Compensation | |||
Excess tax benefits recognized in statements of operations | $ 0 | $ 0 | |
Income Taxes | |||
Accrued for income tax penalties and interest | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Warranty Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the change in estimated warranty liabilities | ||
Balance at beginning of the year | $ 813 | $ 67 |
Provision for warranties during the period | 1,119 | 813 |
Settlements made during the period | (157) | (20) |
Net changes in liability for pre-existing warranties, including expirations and changes in estimates | (959) | (47) |
Balance at end of the year | $ 816 | $ 813 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Net Loss per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 46,010,165 | 20,840,926 | 16,574,761 |
Stock-based awards | |||
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 21,457,946 | 16,413,840 | 11,389,773 |
2023 Notes | |||
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 20,480,638 | ||
Warrants | |||
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 4,071,581 | 4,427,086 | 5,184,988 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Recent Accounting Pronouncements | |||
Additional paid-in capital | $ 428,878 | $ 270,953 | |
Forecast | ASU 2016-02 | Maximum | |||
Recent Accounting Pronouncements | |||
ROU assets as a percentage of total assets | 5.00% | ||
Lease liabilities as a percentage of total liabilities | 5.00% |
Marketable Securities - AFS Deb
Marketable Securities - AFS Debt Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | $ 20,300 | |
Estimated Market Value | $ 0 | 20,300 |
Contractual maturities less than one year | 20,300 | |
Government and agency securities | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 5,990 | |
Estimated Market Value | 5,990 | |
Corporate debt securities | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 14,310 | |
Estimated Market Value | $ 14,310 |
Inventory, Net - Summary (Detai
Inventory, Net - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory, net | ||
Finished goods | $ 1,457 | $ 375 |
Work-in-process | 7,211 | 2,150 |
Raw materials | 1,563 | 466 |
Total | $ 10,231 | $ 2,991 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Prepaid Expenses and Other Current Assets | ||
Contract manufacturing | $ 2,962 | $ 1,601 |
Marketing and sales | 287 | 93 |
IT and software | 244 | 214 |
Interest receivable | 239 | 4 |
Clinical and preclinical | 111 | 35 |
Other | 142 | 145 |
Total prepaid expenses and other current assets | $ 3,985 | $ 2,092 |
Property and Equipment, net - C
Property and Equipment, net - Components (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property and Equipment | ||
Property and Equipment | $ 3,060 | $ 1,893 |
Accumulated depreciation | (1,310) | (1,040) |
Property and Equipment, net | 1,750 | 853 |
Laboratory equipment | ||
Property and Equipment | ||
Property and Equipment | 2,132 | 1,019 |
Office furniture and equipment | ||
Property and Equipment | ||
Property and Equipment | 122 | 87 |
Leased Equipment | ||
Property and Equipment | ||
Property and Equipment | 159 | 159 |
Leasehold improvements | ||
Property and Equipment | ||
Property and Equipment | $ 647 | $ 628 |
Property and Equipment, net - D
Property and Equipment, net - Depreciation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment - Other information | |||
Gross assets recorded under capital leases | $ 0.2 | $ 0.2 | |
Accumulated depreciation associated with capital leases | 0.1 | 0.1 | |
Disposals | 0 | 0 | $ 0 |
Operating expenses and cost of goods sold | |||
Property and Equipment - Other information | |||
Depreciation expense | $ 0.3 | $ 0.2 | $ 0.2 |
Other Balance Sheet Details (De
Other Balance Sheet Details (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Other Balance Sheet Details | ||
Contract manufacturing | $ 6,068 | $ 1,209 |
Compensation and benefits | 3,685 | 2,209 |
Interest on notes payable and 2023 Notes | 1,268 | 180 |
Product warranty | 816 | 813 |
Sales and marketing services | 738 | 25 |
Professional Services | 727 | 917 |
Clinical and preclinical | 147 | 55 |
Other | 402 | 20 |
Total accrued expenses and other current liabilities | $ 13,851 | $ 5,428 |
Commitments and Contingencies -
Commitments and Contingencies - Operating Lease (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)ft²item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Operating Leases | |||
Operating lease expense | $ 700 | $ 600 | $ 500 |
Research and office space | |||
Operating Leases | |||
Leased space, in square feet | ft² | 33,000 | ||
Number of renewal terms | item | 1 | ||
Renewal term of lease | 5 years | ||
Contractually required cash payments | |||
2019 | $ 611 | ||
2020 | 629 | ||
2021 | 648 | ||
2022 | 668 | ||
2023 | 282 | ||
Total | $ 2,838 | ||
Office space | |||
Operating Leases | |||
Additional leased space, in square feet | ft² | 12,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Minimum Payments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and contingencies | |||
Research and development expense | $ 31,863 | $ 30,735 | $ 26,347 |
Corporate development agreement | |||
Commitments and contingencies | |||
Research and development expense | 1,100 | $ 1,200 | |
Future maturities | |||
Future minimum payments | $ 0 |
401(k) Plan (Details)
401(k) Plan (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
401(k) Plan | |
Employer contributions to the 401(k) plan | $ 0 |
Notes Payable and Stock Purch_3
Notes Payable and Stock Purchase Warrants (Details) $ in Thousands | Mar. 29, 2017USD ($) | Nov. 22, 2016USD ($) | Jun. 30, 2016USD ($)instrument | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Notes payable | |||||
Proceeds from issuance of notes | $ 5,000 | $ 22,500 | |||
Oxford Notes | |||||
Notes payable | |||||
Amount used to retire existing loans | $ 11,000 | ||||
Final payment fee, notes | 1,000 | ||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | |||||
Notes payable | |||||
Principal amount | $ 25,000 | ||||
Number of tranches under facility | instrument | 3 | ||||
Prepayment fee percentage within one year of funding | 3.00% | ||||
Prepayment period, first year | 1 year | ||||
Prepayment fee percentage second year after funding date | 2.00% | ||||
Prepayment period, after two years | 2 years | ||||
Prepayment fee percentage after second anniversary of funding | 1.00% | ||||
Debt default, interest rate (as a percent) | 5.00% | ||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | LIBOR | |||||
Notes payable | |||||
Floating annual rate, spread (as a percent) | 6.31% | ||||
90-day U.S. Dollar LIBOR | 90-day U.S. Dollar LIBOR | ||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Floor interest rate | |||||
Notes payable | |||||
Floating annual rate, spread (as a percent) | 0.64% | ||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Floor interest rate | Minimum | |||||
Notes payable | |||||
Floor interest rate (as a percent) | 6.95% | ||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Interest only period | |||||
Notes payable | |||||
Frequency of payment | monthly | ||||
Type of payment required | interest-only | ||||
Tranche 1 Term Loan | |||||
Notes payable | |||||
Proceeds from issuance of notes | $ 15,000 | ||||
Tranche 1 Term Loan | Amended and Restated Loan and Security Agreement | |||||
Notes payable | |||||
Principal amount | 15,000 | ||||
Proceeds from issuance of notes | 15,000 | ||||
Tranche 2 Term Loan | Amended and Restated Loan and Security Agreement | |||||
Notes payable | |||||
Principal amount | 5,000 | ||||
Proceeds from issuance of notes | $ 5,000 | ||||
Tranche 3 Term Loan | Amended and Restated Loan and Security Agreement | |||||
Notes payable | |||||
Principal amount | $ 5,000 | ||||
Proceeds from issuance of notes | $ 5,000 |
Notes Payable and Stock Purch_4
Notes Payable and Stock Purchase Warrants - Term Notes Payable (Details) | Jun. 30, 2016USD ($)$ / sharesshares | Jan. 31, 2018USD ($)$ / shares | Jun. 30, 2018USD ($)shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018USD ($) | Feb. 28, 2018USD ($) |
Long term debt | |||||||
Proceeds from issuance of notes | $ 5,000,000 | $ 22,500,000 | |||||
Aggregate outstanding principal amount | $ 67,700,000 | ||||||
Common Stock | |||||||
Long term debt | |||||||
Debt converted, shares issued | shares | 85,007 | ||||||
Term Notes Payable | |||||||
Long term debt | |||||||
Fair value of notes excluding the derivative liability | 16,700,000 | ||||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | |||||||
Long term debt | |||||||
Transaction costs | $ 600,000 | ||||||
Final prepayment fee (as a percent) | 9.00% | ||||||
Principal amount | $ 25,000,000 | ||||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Stock Purchase Warrants | |||||||
Long term debt | |||||||
Warrant liability | $ 500,000 | ||||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Common Stock | Stock Purchase Warrants, $3.86 Exercise Price | |||||||
Long term debt | |||||||
Term of stock purchase warrants | 10 years | ||||||
Number of shares called by warrants | shares | 116,581 | ||||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 3.86 | ||||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Common Stock | Stock Purchase Warrants, $2.38 Exercise Price | |||||||
Long term debt | |||||||
Term of stock purchase warrants | 10 years | ||||||
Number of shares called by warrants | shares | 63,025 | ||||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 2.38 | ||||||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Common Stock | Stock Purchase Warrants, $1.86 Exercise Price | |||||||
Long term debt | |||||||
Term of stock purchase warrants | 10 years | ||||||
Number of shares called by warrants | shares | 80,645 | ||||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 1.86 | ||||||
2023 Notes | |||||||
Long term debt | |||||||
Principal amount | $ 50,000,000 | $ 3,000,000 | |||||
Interest rate (as a percent) | 5.25% | 5.25% | |||||
Conversion rate (per $1,000 of principal) | 294.1176 | ||||||
Amount of principal which is converted to 294.1176 shares | $ 1,000 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 3.40 | ||||||
Conversion period | 6 months | ||||||
Debt conversion amount | $ 250,000 | ||||||
Aggregate outstanding principal amount | 52,700,000 | ||||||
Fair value of notes excluding the derivative liability | $ 41,000,000 |
Notes Payable and Stock Purch_5
Notes Payable and Stock Purchase Warrants - Scheduled Maturities (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Scheduled maturities | |
2019 | $ 10,000 |
2020 | 5,000 |
2023 | 52,700 |
Total | $ 67,700 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) - Acquisition transactions (Details) | Dec. 07, 2015$ / sharesshares | Dec. 31, 2018$ / shares | Dec. 31, 2017$ / shares |
Class of stock information | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Senseonics Reverse Merger Agreement | Senseonics, Incorporated | Common Stock, Senseonics, Inc. | |||
Class of stock information | |||
Common stock, par value | $ 0.01 | ||
Senseonics Reverse Merger Agreement | ASN Technologies, Inc. | Common Stock | Common Stock, Senseonics, Inc. | Common Shares Exchanged in Reverse Capitalization | |||
Class of stock information | |||
Common stock, par value | $ 0.001 | ||
Shares issued | shares | 1,955,929 | ||
Exchange ratio | 2.0975 | ||
Senseonics Reverse Merger Agreement | ASN Technologies, Inc. | Common Stock | Preferred Stock, Senseonics, Inc. | Common Shares Exchanged in Reverse Capitalization | |||
Class of stock information | |||
Common stock, par value | $ 0.001 | ||
Shares issued | shares | 55,301,674 |
Stockholders' Equity (Deficit_3
Stockholders' Equity (Deficit) - Class of Stock (Details) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Class of stock information | ||
Common stock, shares authorized | 450,000,000 | 250,000,000 |
Common stock, shares issued | 176,918,381 | 136,882,735 |
Common stock, shares outstanding | 176,918,381 | 136,882,735 |
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred Stock, Designated | ||
Class of stock information | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Undesignated | ||
Class of stock information | ||
Preferred stock, shares authorized | 0 | 0 |
Stockholders' Equity (Deficit_4
Stockholders' Equity (Deficit) - Stock Purchase Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2014 |
Stock Purchase Warrants | Interest Expense | |||||
Stock Purchase Warrants | |||||
Accretion of debt discount | $ 0.2 | $ 0.2 | $ 0.1 | ||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants | Warrant liability | |||||
Stock Purchase Warrants | |||||
Warrant liability | $ 0.5 | ||||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $3.86 Exercise Price | Warrant liability | Common Stock | |||||
Stock Purchase Warrants | |||||
Term of stock purchase warrants | 10 years | ||||
Number of shares called by warrants | 116,581 | ||||
Exercise price of warrant (in dollars per share) | $ 3.86 | ||||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $2.38 Exercise Price | Warrant liability | Common Stock | |||||
Stock Purchase Warrants | |||||
Term of stock purchase warrants | 10 years | ||||
Number of shares called by warrants | 63,025 | ||||
Exercise price of warrant (in dollars per share) | $ 2.38 | ||||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $1.86 Exercise Price | Warrant liability | Common Stock | |||||
Stock Purchase Warrants | |||||
Term of stock purchase warrants | 10 years | ||||
Number of shares called by warrants | 80,645 | ||||
Exercise price of warrant (in dollars per share) | $ 1.86 | ||||
Oxford Notes | Stock Purchase Warrants | Common Stock | |||||
Stock Purchase Warrants | |||||
Term of stock purchase warrants | 10 years | ||||
Number of shares called by warrants | 167,570 | ||||
Exercise price of warrant (in dollars per share) | $ 1.79 | ||||
Oxford Notes | Stock Purchase Warrants | Warrant liability | |||||
Stock Purchase Warrants | |||||
Warrant liability | $ 0.2 |
Stockholders' Equity (Deficit_5
Stockholders' Equity (Deficit) - Stock-Based Compensation (Details) - shares | Feb. 16, 2016 | Dec. 31, 2015 | Dec. 31, 2018 | Jan. 01, 2019 |
Stock-based compensation | ||||
Options vested and expected to vest | 21,458,000 | |||
2015 Equity Incentive Plan | ||||
Stock-based compensation | ||||
Expiration period | 10 years | |||
Total shares that may be issued | 17,251,115 | |||
Shares available for grant | 8,000,000 | 752,493 | ||
Automatic annual increase in shares authorized, percent of common stock outstanding | 3.50% | |||
2015 Equity Incentive Plan | Maximum | ||||
Stock-based compensation | ||||
Additional shares authorized | 9,251,115 | |||
2015 Equity Incentive Plan | Forecast | ||||
Stock-based compensation | ||||
Shares available for grant | 6,944,635 | |||
1997 Stock Option Plan | ||||
Stock-based compensation | ||||
Expiration period | 10 years | |||
Total shares that may be issued | 9,175,860 |
Stockholders' Equity (Deficit_6
Stockholders' Equity (Deficit) - Black-Scholes Option Pricing Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair value of stock-option awards | |||
Expected term of options | 6 years 6 months | 6 years 6 months | 6 years 6 months |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Minimum | |||
Fair value of stock-option awards | |||
Expected volatility rate | 63.52% | 60.66% | 58.99% |
Risk-free rate | 2.45% | 1.90% | 1.40% |
Maximum | |||
Fair value of stock-option awards | |||
Expected volatility rate | 66.95% | 75.43% | 61.39% |
Risk-free rate | 3.08% | 2.30% | 2.30% |
Stockholders' Equity (Deficit_7
Stockholders' Equity (Deficit) - Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Compensation expense | |||
Stock-based compensation expense | $ 6,375 | $ 4,098 | $ 3,585 |
Total intrinsic value of stock options outstanding | 15,400 | ||
Total intrinsic value of stock options vested and expected to vest | 15,400 | ||
Total fair value of options vested | 5,400 | 3,600 | |
Employee granted stock options | |||
Compensation expense | |||
Stock-based compensation expense | 6,400 | 4,100 | 3,600 |
Unrecognized compensation cost | $ 15,800 | ||
Weighted average period expected to recognize unrecognized compensation cost | 2 years 10 months 17 days | ||
Restricted Stock Award | |||
Compensation expense | |||
Unrecognized compensation cost | $ 0 | ||
Sales and marketing expenses | |||
Compensation expense | |||
Stock-based compensation expense | 1,685 | 509 | 202 |
Research and development | |||
Compensation expense | |||
Stock-based compensation expense | 1,364 | 930 | 518 |
General and administrative | |||
Compensation expense | |||
Stock-based compensation expense | 3,326 | 2,659 | 2,865 |
General and administrative | Restricted Stock Award | |||
Compensation expense | |||
Stock-based compensation expense | $ 300 | $ 300 | $ 1,600 |
Stockholders' Equity (Deficit_8
Stockholders' Equity (Deficit) - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock option activity | |||
Options outstanding- Beginning | 16,395,000 | 11,389,000 | |
Options granted | 7,533,000 | 5,674,000 | |
Options exercised | (1,438,671) | (508,625) | (268,670) |
Options canceled/forfeited | (1,031,000) | (159,000) | |
Options outstanding- Ending | 21,458,000 | 16,395,000 | 11,389,000 |
Weighted Average Exercise Price Per Share | |||
Options outstanding- Beginning (in dollars per share) | $ 1.61 | $ 1.26 | |
Options granted (in dollars per share) | 3.03 | 2.24 | |
Options exercised (in dollars per share) | 1.20 | 0.64 | |
Options canceled/forfeited (in dollars per share) | $ 2.43 | 2.47 | |
Options outstanding- Ending (in dollars per share) | $ 1.61 | $ 1.26 | |
Option awards - additional information | |||
Options vested and expected to vest | 21,458,000 | ||
Options vested and expected to vest (in dollars per share) | $ 2.10 | ||
Number of options exercisable | 11,637,000 | ||
Weighted-average exercise price of exercisable options | $ 1.47 | ||
Weighted-average remaining contractual life of outstanding stock options | 6 years 8 months 5 days | ||
Weighted-average remaining contractual life of exercisable options | 5 years 3 months 7 days |
Stockholders' Equity (Deficit_9
Stockholders' Equity (Deficit) - Stock Option Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Option awards - additional information | |||
Weighted average fair value of stock options granted | $ 1.91 | $ 1.36 | $ 1.76 |
Options exercised | 1,438,671 | 508,625 | 268,670 |
Aggregate intrinsic value of options exercised | $ 3.7 | $ 1 | $ 0.7 |
Total fair value of options vested | 5.4 | $ 3.6 | |
Aggregate intrinsic value of options currently exercisable | 14 | ||
Total intrinsic value of stock options outstanding | 15.4 | ||
Total intrinsic value of stock options vested and expected to vest | $ 15.4 | ||
Weighted average grant date fair value of the unvested stock option awards outstanding | $ 1.76 | $ 1.25 | |
Weighted average grant date fair value of stock options vested (in dollars per share) | 1.20 | ||
Weighted average grant date fair value of stock options exercised | 0.92 | ||
Weighted average grant date fair value of the stock option awards forfeited/cancelled | $ 1.46 |
Stockholders' Equity (Defici_10
Stockholders' Equity (Deficit) - Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-based compensation | |||||
Total stock-based compensation | $ 6,375 | $ 4,098 | $ 3,585 | ||
Restricted Stock Award | |||||
Restricted stock, nonvested, Number of Shares | |||||
Restricted Stock Awards nonvested , Beginning balance | 18,760 | ||||
Granted | 91,786 | ||||
Vested | 110,546,000 | ||||
Restricted Stock Awards nonvested , Ending balance | 18,760 | ||||
Restricted stock, nonvested, Weighted Average Grant Price | |||||
Restricted Stock Awards nonvested (in dollars per share) | $ 0 | ||||
Granted (in dollars per share) | 3.40 | ||||
Vested (in dollars per share) | 3.26 | ||||
Restricted Stock Awards nonvested (in dollars per share) | $ 0 | ||||
Other information | |||||
Weighted-average exercise price on date of exercise | $ 3.40 | ||||
Chairman | Restricted Stock Award | |||||
Stock-based compensation | |||||
Shares issued | 300,000 | 398,525 | |||
Total stock-based compensation | $ 1,200 | ||||
Board of directors and consultants | Restricted Stock Award | |||||
Stock-based compensation | |||||
Shares issued for services | 91,786 | ||||
Employees | Restricted Stock Award | |||||
Stock-based compensation | |||||
Shares issued for services | 23,450 | ||||
Vesting on grant date | Chairman | Restricted Stock Award | |||||
Stock-based compensation | |||||
Vesting percentage | 50.00% | ||||
Performance-based vesting conditions | Chairman | Restricted Stock Award | |||||
Stock-based compensation | |||||
Vesting percentage | 50.00% |
Stockholders' Equity (Defici_11
Stockholders' Equity (Deficit) - Acquisition Transactions (Details) | Dec. 07, 2015$ / sharesshares | Dec. 31, 2018$ / sharesshares | Dec. 31, 2017$ / sharesshares |
Significant Transaction | |||
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 | |
Preferred stock, shares outstanding | shares | 0 | 0 | |
Senseonics, Incorporated | Senseonics Reverse Merger Agreement | Common Stock, Senseonics, Inc. | |||
Significant Transaction | |||
Common stock, par value per share (in dollars per share) | $ 0.01 | ||
ASN Technologies, Inc. | Senseonics Reverse Merger Agreement | Common Stock | Common Stock, Senseonics, Inc. | Common Shares Exchanged in Reverse Capitalization | |||
Significant Transaction | |||
Common stock, par value per share (in dollars per share) | $ 0.001 | ||
Shares issued | shares | 1,955,929 | ||
Exchange ratio | 2.0975 | ||
ASN Technologies, Inc. | Senseonics Reverse Merger Agreement | Common Stock | Preferred Stock, Senseonics, Inc. | Common Shares Exchanged in Reverse Capitalization | |||
Significant Transaction | |||
Common stock, par value per share (in dollars per share) | $ 0.001 | ||
Shares issued | shares | 55,301,674 |
Income Taxes - Tax Provision (D
Income Taxes - Tax Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | |||
Income tax provision | $ 0 | $ 0 | $ 0 |
Deferred income tax assets (liabilities) | |||
Net operating loss carryforwards | 67,823 | 54,748 | |
Capitalized start-up costs | 10,487 | 13,229 | |
R&E credit carryforwards | 7,875 | 6,680 | |
Stock-based compensation | 2,024 | 1,508 | |
Change in fair value of derivative liability | 3,978 | ||
Other | 355 | 265 | |
Total deferred tax asset | 92,542 | 76,430 | |
Amortization of debt discount | (3,419) | ||
Net deferred tax assets before valuation allowance | 89,123 | 76,430 | |
Valuation allowance | (89,123) | (76,430) | |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss and Tax Credit Carryforwards (Details) - USD ($) | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Carryforwards | |||
Increase (decrease) in valuation allowance | $ (30,800,000) | $ 12,700,000 | $ (7,300,000) |
Net operating loss carryforwards | 291,400,000 | ||
Income tax (benefit) for stock-based compensation arrangements | 0 | ||
Research and Development Credit Carryforwards | |||
Carryforwards | |||
Tax credit carryforwards | $ 7,900,000 | ||
Capitalized Start-up Costs Prior to October 22, 2004 | |||
Carryforwards | |||
Amortization period for tax purposes | 60 months | ||
Capitalized Start-up Costs On or After October 22, 2004 | |||
Carryforwards | |||
Amortization period for tax purposes | 180 months |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the estimated U.S. federal statutory rate to the Company's effective income tax rate | |||
Tax at U.S. Federal Statutory rate (as a percent) | 21.00% | 34.00% | 34.00% |
State taxes, net (as a percent) | 2.27% | 5.15% | 5.45% |
Research and development credit (as a percent) | 1.27% | 1.79% | 1.82% |
Tax reform (as a percent) | (52.54%) | ||
State tax rate changes (as a percent) | (10.64%) | ||
Other non-deductible (as a percent) | (0.39%) | (0.86%) | 0.07% |
Increase (decrease) in valuation allowance (as a percent) | (13.51%) | 12.46% | (41.34%) |
Effective income tax rate (as a percent) | 0.00% | 0.00% | 0.00% |
Income Taxes - Tax Law Change (
Income Taxes - Tax Law Change (Details) - USD ($) | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Changes in tax laws | ||||
Tax at U.S. Federal Statutory rate | 21.00% | 34.00% | 34.00% | |
Tax reform adjustments | $ 0 | |||
Change in deferred tax assets | $ 30,800,000 | |||
Increase (decrease) in valuation allowance | (30,800,000) | $ 12,700,000 | $ (7,300,000) | |
Tax reform - net tax expense | $ 0 |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in uncertain tax positions | |||
Gross unrecognized tax benefit at beginning of year | $ 1,670 | $ 1,383 | $ 1,174 |
Increase from tax positions taken in prior years | 22 | 9 | |
Increase from tax positions in current year | 323 | 265 | 200 |
Lapse of statute of limitations/expiration | (24) | ||
Gross unrecognized tax benefit at end of year | 1,969 | 1,670 | 1,383 |
Accrued for income tax penalties and interest | $ 0 | $ 0 | $ 0 |
Related Party Transactions - Re
Related Party Transactions - Revenues (Details) - Roche Diabetes Care (related party) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related party transactions | ||
Revenues | $ 16.2 | $ 5.8 |
Due from related party | $ 6.3 | $ 3.3 |
Related Party Transactions - Sh
Related Party Transactions - Share-based awards (Details) - Chairman - USD ($) $ in Millions | 1 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 07, 2015 | |
Related party transactions | |||
Cash payments earned | $ 0.8 | ||
Restricted Stock Award | |||
Related party transactions | |||
Restricted stock awarded to board member | 398,525 | ||
Vesting on grant date | Restricted Stock Award | |||
Related party transactions | |||
Restricted stock awarded to board member | 300,000 | ||
Vesting percentage | 50.00% |
Related Party Transactions - No
Related Party Transactions - Note purchase agreement (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 07, 2015 | |
Related Party Transaction [Line Items] | ||||
Proceeds from issuance of notes | $ 5,000 | $ 22,500 | ||
Repayments of Notes Payable | $ 10,000 | 12,500 | ||
Energy Capital Facility | Energy Capital | ||||
Related Party Transaction [Line Items] | ||||
Maximum amount available under facility | $ 10,000 | |||
Proceeds from issuance of notes | 2,500 | |||
Repayments of Notes Payable | $ 2,500 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value Measurements | ||
Money market funds | $ 136,793 | $ 16,150 |
Marketable securities | 0 | 20,300 |
Embedded conversion option | 17,091 | |
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | 0 | 0 |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 |
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0 | 0 |
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0 | 0 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers Into Level 3 | 0 | 0 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers out of Level 3 | 0 | 0 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0 | 0 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | 0 |
Recurring | Embedded conversion option | ||
Fair Value Measurements | ||
Embedded conversion option | 17,091 | |
Recurring | Money market funds | ||
Fair Value Measurements | ||
Money market funds | 4,706 | |
Recurring | Government and agency securities | ||
Fair Value Measurements | ||
Marketable securities | 7,987 | |
Recurring | Corporate debt securities | ||
Fair Value Measurements | ||
Marketable securities | 17,708 | |
Recurring | Level 1 | Money market funds | ||
Fair Value Measurements | ||
Money market funds | 4,706 | |
Recurring | Level 2 | Government and agency securities | ||
Fair Value Measurements | ||
Marketable securities | 7,987 | |
Recurring | Level 2 | Corporate debt securities | ||
Fair Value Measurements | ||
Marketable securities | $ 17,708 | |
Recurring | Level 3 | Embedded conversion option | ||
Fair Value Measurements | ||
Embedded conversion option | 17,091 | |
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||
Issuance of the 2023 Notes | 17,300 | |
Change in fair value included in other income (expense) | (209) | |
Balance at the end of the period | $ 17,091 |
Fair Value Measurements - Nonre
Fair Value Measurements - Nonrecurring (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Nonrecurring | |||
Fair Value Measurements | |||
Financial assets, fair value | $ 0 | ||
Financial liabilities, fair value | 0 | ||
Fair value impairment recognized on long-lived assets | 0 | $ 0 | $ 0 |
Recurring | |||
Fair Value Measurements | |||
Fair value of non-financial assets | 0 | ||
Fair value of non-financial liabilities | $ 0 |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation Assumptions (Details) - Level 3 | Dec. 31, 2018USD ($) |
Discount rate | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.132 |
Stock price volatility | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.670 |
Risk free rate | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.025 |
Selected Quarterly Informatio_3
Selected Quarterly Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Revenue, primarily from a related party | $ 7,186 | $ 5,158 | $ 3,623 | $ 2,946 | $ 2,909 | $ 2,097 | $ 814 | $ 553 | $ 18,913 | $ 6,373 | $ 332 |
Gross profit | (4,984) | (2,584) | (216) | (362) | (1,133) | (860) | (900) | (492) | (8,146) | (3,385) | (328) |
Operating expenses | 23,628 | 20,391 | 19,848 | 15,565 | 14,537 | 15,745 | 10,741 | 11,905 | |||
Operating loss | 28,612 | 22,975 | 20,064 | 15,927 | 15,670 | 16,605 | 11,641 | 12,397 | 87,578 | 56,313 | 42,433 |
Net loss | $ 7,321 | $ 31,881 | $ 32,496 | $ 22,273 | $ 16,275 | $ 17,379 | $ 12,374 | $ 13,073 | $ 93,971 | $ 59,101 | $ 43,930 |
Basic and diluted net loss per common share (in dollar per share) | $ (0.04) | $ (0.18) | $ (0.23) | $ (0.16) | $ (0.12) | $ (0.13) | $ (0.12) | $ (0.14) | $ (0.60) | $ (0.51) | $ (0.49) |
Litigation (Details)
Litigation (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Claims | Accrued and other liabilities and Other noncurrent liabilities | |||
Litigation | |||
Accrual for claims liability | $ 0 | $ 0 | $ 40 |
Subsequent Events - (Details)
Subsequent Events - (Details) | Jan. 31, 2019country |
Subsequent Event | Roche | Distribution Agreement | |
Subsequent Event [Line Items] | |
Number of additional countries with exclusive distribution rights | 17 |